Lately, the UK has tied itself in knots defining the term ‘working people’. Unfortunately for the new government, which invited the debate with some loosely worded manifesto pledges, its recent Budget didn’t exactly extinguish the confusion.
Take the surprise freeze to fuel duty. While billed as a leg-up to “hard-working families”, past Office for National Statistics data suggests it’s likely to benefit the wealthiest drivers the most, regardless of whether they work. Or the decision to scrap inheritance tax on unspent pensions, which may lead some workers to ask what they are saving for. Other core measures designed to “put more money in working people’s pockets” define that group in very narrow terms: those on minimum wage, or in receipt of universal credit or working tax credits.
But let’s cut Reeves et al a bit of slack. For those in work, income tax and employees’ national insurance contributions (NICs) are the biggies, and they were left untouched. A promise to link income tax thresholds to inflation from 2028 may not be much use today, but for pay packets, a potential end to fiscal drag in this parliament is welcome news.